The Basics
The Royal Institute of British Architects (RIBA) have published new “2018” versions of their two Building Contracts, originally released in November 2014. The contracts come in two separate versions. The Domestic Building Contract (DBC) is specifically aimed at Clients who may be classed as a ‘consumer’ for the purposes of consumer protection legislation. The concise Building Contract (CBC) is designed for use in a ‘business to business’ relationship, and together they mirror the convention adopted in the ‘Domestic’ and ‘Concise’ RIBA Agreements for professional services, used to appoint consultants.
The intention of the two Building Contracts was to strike a fair balance of risk between the parties to the contract, while at the same time being accessible and easy to use, with a clear layout and straightforward language (‘Plain English’ is a requirement for consumer contracts anyway, but this has been carried into the CBC too with the idea of maintaining a sense of familiarity between the two contracts).
In addition, there are some pieces of legislation which only apply to consumers, and some which only applies to businesses, but it was hoped that Architects, Clients and Contractors in particular would recognise the benefits of having similar wording and format wherever possible.
By 2017, RIBA decided to take stock of feedback received on the contracts – both good and bad. A series of workshops took place including representatives from users, Architects, Lawyers, and other interested parties, together with representatives of Client and Contractor groups.
Detailed Review
The review considered a number of topics, including ease of use and understanding of the contracts, their language, and comments made by observers. In addition, the publishers had some ideas of their own, which were added to the discussion.
For the most part, the changes are in response to industry feedback, either to make the contract read more easily, or to clarify areas where there has been feedback.
There are, however, a couple of areas where a more detailed review has taken place.
Firstly, Clause 7 “Contract Price & Payment” has been redrafted in both the Domestic and Concise Contracts. Although the Housing Grants, Construction and Regeneration Act 1996 (as amended) does not apply to Residential Occupiers (as defined), the payment provisions contained in the Act are relatively straightforward, so the Working Group felt that from an administrative viewpoint it would be easier for all parties if similar provisions were included in both contracts, rather than having to learn a slightly different procedure in each case. The number of payment options has also been increased to allow greater flexibility.
Secondly, it was recognised that the Client and Contractor who will typically use these contracts, probably have limited knowledge of the kinds of things which need to be insured – and who can insure them.
As a result, the guidance on this topic has been reconsidered, with the aim of improving clarity and understanding of what is required, and the type of cover available.
However, the Contracts still recognise that insurance is a highly technical subject and the wordings of policies vary significantly between insurers. It is imperative, therefore, that the Parties seek specialist advice before making decisions on the insurance requirements.
The role of Contract Administrator
The advantages of appointing a professional, independent Contract Administrator cannot be overstated, especially where the Client may not be particularly experienced in this type of activity.
As might be expected from a contract produced by a professional body, this is given much emphasis. While there is an option for the Client to choose to act as Contract Administrator, the guidance contains a warning that this should only happen in limited circumstances, for instance when the Works are very simple, or the Client has experience of undertaking such as role.
This is important because there are situations where the Contract Administrator is required to act impartially. Failure to carry out this role appropriately may result in the Works costing more and finishing later than envisaged, as well as being a potential source of disputes.
Key changes to the RIBA Building Contracts
- Contract Conditions have been carefully reviewed in response to industry feedback. This has resulted in some changes to procedures, with the intention of making their operation simpler.
- The contracts have been updated to reflect changes in legislation – in particular the Consumer Rights Act and the latest version of the Construction (Design and Management) Regulations, both of which came into effect in 2015.
- The guidance notes have been improved to help make the contract easier to understand and use.
- The Contract Details - the bit where the contract variables, such as start and finish dates, and contract sum and are listed, and the optional features are chosen - has been simplified so that wherever possible the order and numbering is the same in both contracts
- The Contract Conditions have been reviewed in order that so far as possible clause and sub-clause numbering is more consistent between the two contracts.
- A checklist has been added to both contracts.It does not form part of the contract but helps users make sure they have finished everything they need to do before signing the legally binding contract
